An Ontario insurer that wrote elective collision protection for a shopper is just not on the hook for injury to a loaner automobile borrowed by that shopper whereas that shopper’s personal automobile was in for restore, a choose wrote in a ruling overturning a small claims trial determination.
In 2017, Thane Fitzgerald introduced his personal automobile in, for repairs, to a Volkswagen dealership. Whereas ready for his personal automobile, he acquired a free “loaner,” offered by Owasco Canadian Automotive & Camper Rental.
The loaner – insured by way of the Lloyd’s market – was broken in the course of the mortgage. The accident was not Fitzgerald’s fault.
However Fitzgerald had signed a contract through which he agreed to return the loaner, to Owaso, in the identical situation it had been in when he obtained it. He additionally agreed to pay Owasco for any damages the loaner suffered whereas in Fitzgerald’s possession, “whether or not or not because of [his] fault.”
Owasco claimed the injury to its personal automobile was about $5,600. There was a $25,000 deductible on its coverage with Lloyd’s. Fitzgerald had insurance coverage on his personal automobile by way of Coachman.
Owasco sued Coachman (a Saskatchewan Authorities Insurance coverage subsidiary that writes Ontario auto) and Fitzgerald in small claims court docket, which initially determined in favour of Owasco.
However the small claims trial ruling was reversed on enchantment in Owasco Canadian Automotive & Camper Rental Ltd. v. Fitzgerald et al., launched Nov. 10, 2021 by the Ontario Superior Court docket of Justice.
Within the 2021 ruling, Justice Jonathan Dawe awarded Coachman and Fitzgerald $6,500 in prices.
The choose within the authentic small claims trial cited A Plus Automotive & Truck Rental v. Pun, launched in 1999 by the Divisional Court docket.
However Justice Dawe famous, in his 2021 ruling in Owasco, that the 1999 A Plus ruling was over an accident that occurred earlier than 1996.
One level of rivalry – in each the A Plus case from the Nineties and the latest Owasco case – was the interpretation of Part 263 of the Ontario Insurance coverage Act. That legislation spells out the method of getting direct compensation-property injury protection in accidents involving two or extra insured cars.
In 1996, the Ontario legislature added 263(5) to the Insurance coverage Act, which stipulates the next: “An insured has no proper of motion in opposition to an individual underneath an settlement, apart from a contract of car insurance coverage, in respect of damages to the insured’s car or its contents or lack of use, besides to the extent that the individual is at fault or negligent in respect of these damages or that loss.”
Within the Nineties – earlier than Part 263 (5) got here into power – the courts typically stated that Part 263 is just not supposed to deprive a automobile proprietor of the appropriate to sue, for injury to that automobile, underneath a contract that the proprietor signed with the driving force.
“The s. 263 Direct Compensation – Property Harm scheme requires Owasco to look to its personal insurer for compensation. Owasco is unable to take action solely as a result of it selected to buy insurance coverage that has a really excessive deductible, presumably in order that it might pay a smaller premium. Owasco should now dwell with the results of its alternative,” wrote Justice Dawe.
However Owasco argued that part 263 (5) doesn’t apply to break to a “momentary substitute car” that can be insured underneath the renter’s personal insurance coverage coverage.
This, Owasco stated, is as a result of elective collision protection (which Fitzgerald had with Coachman) consists of injury to momentary substitute cars.
Owasco additional argued that part 7.4.3 of the usual Ontario Vehicle Coverage Proprietor’s Coverage (OAP-1) signifies that the provincial authorities had supposed that individuals who hire or borrow a brief substitute car might enter right into a contract agreeing to reimburse the proprietor for any injury, no matter their very own fault.
Part 7.4.3. reads:
When you or anybody else drives a brief substitute car (described in Part 2), you could be liable for any injury to it because of legal responsibility imposed by legislation or agreed to by you or the driving force. In that case, we pays for direct injury for which you or the driving force are legally accountable, minus the deductible for that peril underneath this coverage.
Owasco additionally pointed to 236 (6) of the Insurance coverage act which reads: “This part doesn’t have an effect on an insured’s proper to get better in respect of any bodily injury protection in respect of the insured car.”
However Justice Dawe discovered that part 263(6) “merely clarifies that insured individuals who’ve bought elective collision protection aren’t barred by s. 263 from making claims underneath this protection. The subsection doesn’t say that s. 263 turns into solely inapplicable when such a declare is or may be made.”
Part 7.4.3 solely says that insured individuals who drive a brief substitute car “might be liable for any injury to it” that they’ve agreed to pay for, wrote Justice Dawe.
“It doesn’t say that they essentially will be liable for this injury. Certainly, s. 7.4.3 goes on to elucidate that the insurer will solely pay for damages ‘for which you or the driving force are legally accountable.’”
In conditions the place s. 263(5)(a.1) of the Insurance coverage Act limits or eliminates the proprietor’s proper of motion underneath an settlement with the insured individual, the insured individual will not be “legally accountable” to pay for some or the entire injury, Justice Dawe wrote.
Characteristic picture through iStock.com/alexsl
